What changed in this filing

/stocks — the workspaceLOADING

Item 1. Legal Proceedings

2022-01-18 compared with 2021-10-14 · 79 added, 72 removed, 18 unchanged (89% of the section changed)

Legal Proceedings

are subject to the legal proceedings and claims discussed below as well as certain other legal proceedings and claims that have not been

fully resolved and that have arisen in the ordinary course of business.

Our management evaluates our exposure to these claims and proceedings

individually and in the aggregate and evaluates potential losses on such litigation if the amount of the loss is estimable and the loss

However, the outcome of legal proceedings and claims brought against the Company is subject to significant uncertainty.

Although management considers the likelihood of such an outcome to be remote, if one or more of these legal matters were resolved against

the Company for amounts in excess of management’s expectations, the Company’s financial statements for that reporting period

could be materially adversely affected.

The Company settled certain matters subsequent to year end that did not individually or in the

aggregate have a material impact on the Company’s financial condition or operating results.

2017, the Company’s former COO was awarded approximately $238,000 in accrued salary and related charges by the California labor

In August 2021, the Company reached a settlement by which the Company agreed to pay approximately $330,000, representing the principal

award plus accrued interest.

We are subject to the legal proceedings and claims

discussed below as well as certain other legal proceedings and claims that have not been fully resolved and that have arisen in the ordinary

course of business.

Our management evaluates our exposure to these claims and proceedings individually and in the aggregate and evaluates

potential losses on such litigation if the amount of the loss is estimable and the loss is probable.

However, the outcome of legal proceedings

and claims brought against the Company is subject to significant uncertainty.

Although management considers the likelihood of such an

outcome to be remote, if one or more of these legal matters were resolved against the Company for amounts in excess of management’s

expectations, the Company’s financial statements for that reporting period could be materially adversely affected.

The Company settled

certain matters subsequent to year end that did not individually or in the aggregate have a material impact on the Company’s financial

condition or operating results.

In 2017, the Company’s

former COO was awarded approximately $238,000 in accrued salary and related charges by the California labor board.

In September 2021,

the Company reached a settlement by which the Company agreed to pay approximately $330,000, representing the principal award plus accrued

As of the time of this filing, the Company has paid approximately $109,000 toward the settlement amount.

The remaining balance of approximately $251,000 is to be paid no later than September 1, 2022 and accrues interest of 10% per

annum until paid.

Company is presently engaged in a dispute with one of its former directors, Robert Kopple, relating to approximately $11.7 million (representing

approximately $5.4 million loaned to the Company over the course of 2013 to 2016;

The remaining balance

of approximately $228,000, including accrued interest of $7,500 for the period September 1 to December 31, 2021, is to be paid no

later than September 1, 2022 and accrues interest of 10% per annum until paid.

The Company is presently engaged in a

dispute with one of its former directors, Robert Kopple, relating to approximately $11.9 million (representing approximately $5.4

million loaned to the Company over the course of 2013 to 2016;

approximately $170,000 Mr.

Kopple claims to have advanced

or paid to third parties on Aura’s behalf;

Kopple claims to have advanced or paid to

third parties on Aura’s behalf;

and approximately $6.3 million Mr.

Kopple claims to be owed for interest, loan fees

and late payment fees) and approximately 3.33 million warrants which Mr.

Kopple claims to be owed for interest, loan fees and late

payment fees) and approximately 3.33 million warrants which Mr.

Kopple claims to be owed to him and his affiliates by the Company.

8 unchanged sentences

Howsmon and Mr.

Gagerman, and as a result of these successful demurrers,

all four of these defendants have been dismissed from the suit.

While the Company believes that it has certain valid defenses in these

matters, the Company is currently in settlement discussions with Mr.

However, to-date, no settlement has been reached in

large part because Mr.

Kopple continues to demand that as part of any such settlement, he receive unilateral control over significant

aspects of the Company’s financial and management functions such as, but not limited to, the right to unilaterally direct the Company’s

ordinary business expenditures and requiring the Company to seek his approval for the hiring of nearly all personnel, all to the exclusion

of the Company’s management team and stockholder-elected Board of Directors.

Gagerman, and as a result of these

successful demurrers, all four of these defendants have been dismissed from the suit.

While the Company believes that it has certain

valid defenses in these matters, the Company is currently in settlement discussions with Mr.

However, to-date, no

settlement has been reached in large part because Mr.

Kopple continues to demand that as part of any such settlement, he receive

unilateral control over significant aspects of the Company’s financial and management functions such as, but not limited to,

the right to unilaterally direct the Company’s ordinary business expenditures and requiring the Company to seek his approval

for the hiring of nearly all personnel, all to the exclusion of the Company’s management team and stockholder-elected Board of

The Company believes that allowing Mr.

level of operational control over the Company without any accountability would be highly detrimental to the Company and is incompatible

with the Board of Directors’ duties to shareholders and creditors as a whole.

March 26, 2019, various stockholders of the Company controlling a combined total of more than 27.5 million shares delivered a signed

written consent to the Company removing Ronald Buschur as a member of the Company’s Board and electing Cipora Lavut as a director

of the Company.

On March 27, 2019, those same stockholders delivered a further signed written consent to the Company removing William

Anderson and Si Ryong Yu as members of the Company’s Board and electing Robert Lempert and David Mann as directors of the Company.

These written consents represented a majority of the outstanding shares of the Company’s common stock as of March 26, 2019

and March 27, 2019, respectively.

Because of Aura’s refusal to recognize the legal effectiveness of the consents, on April 8,

2019 the stockholders filed suit in the Court of Chancery of the State of Delaware pursuant to Section 225 of the Delaware General

Corporations Law, seeking an order confirming the validity of the consents and declaring that Aura’s Board consists of Ms.

Douglas and Mr.

Diaz-Versón, Jr.

On July 8, 2019 the Court of Chancery entered

final judgment in favor of the stockholder plaintiffs, confirming that (a) Ronald Buschur, Si Ryong Yu and William Anderson had been

validly removed by the holders of a majority of the Company’s outstanding stock acting by written consent (b) Ms.

Lempert had been validly elected by the holders of a majority of the Company’s outstanding stock acting by written consent,

and (c) the Company’s Board of Directors validly consists of Cipora Lavut, David Mann, Robert Lempert, Gary Douglas and Salvador

Kopple such level of operational control over the Company without any

accountability would be highly detrimental to the Company and is incompatible with the Board of Directors’ duties to

shareholders and creditors as a whole.

On March 26, 2019, various stockholders of the

Company controlling a combined total of more than 27.5 million shares delivered a signed written consent to the Company removing Ronald

Buschur as a member of the Company’s Board and electing Cipora Lavut as a director of the Company.

On March 27, 2019, those

same stockholders delivered a further signed written consent to the Company removing William Anderson and Si Ryong Yu as members of the

Company’s Board and electing Robert Lempert and David Mann as directors of the Company.

These written consents represented a majority

of the outstanding shares of the Company’s common stock as of March 26, 2019 and March 27, 2019, respectively.

of Aura’s refusal to recognize the legal effectiveness of the consents, on April 8, 2019 the stockholders filed suit in the

Court of Chancery of the State of Delaware pursuant to Section 225 of the Delaware General Corporations Law, seeking an order confirming

the validity of the consents and declaring that Aura’s Board consists of Ms.

Diaz-Versón, Jr.

As a result of prior management’s unsuccessful opposition to this stockholders’ action filed in the Court of

Chancery, such stockholders may be potentially entitled to recoup their litigation costs from the Company under Delaware’s corporate

benefit doctrine and/or other legal provisions.

To-date, no final determination has been made as to the amount of recoupment, if any,

to which such stockholders may be entitled.

June 20, 2013, the Company entered into an agreement with two individuals, Mr.

On July 8, 2019 the Court of Chancery entered final judgment in favor of the stockholder plaintiffs,

confirming that (a) Ronald Buschur, Si Ryong Yu and William Anderson had been validly removed by the holders of a majority of the Company’s

outstanding stock acting by written consent (b) Ms.

Lempert had been validly elected by the holders of a majority

of the Company’s outstanding stock acting by written consent, and (c) the Company’s Board of Directors validly consists of

Cipora Lavut, David Mann, Robert Lempert, Gary Douglas and Salvador Diaz-Versón, Jr.

As a result of prior management’s unsuccessful

opposition to this stockholders’ action filed in the Court of Chancery, such stockholders may be potentially entitled to recoup their

litigation costs from the Company under Delaware’s corporate benefit doctrine and/or other legal provisions.

To-date, no final determination

has been made as to the amount of recoupment, if any, to which such stockholders may be entitled.

On June 20, 2013, the Company entered into an

agreement with two individuals, Mr.

Abdou and Mr.

Abdou, for the sale of $125,000 of

secured convertible notes payable (the “Notes”) and warrants.

In 2016, the Company and the Company’s former Chief Executive

Officer, Melvin Gagerman, were named among several other defendants in a lawsuit filed by the Messrs.

Abdou demanding repayment of loans

totaling $125,000 plus accrued interest and exemplary damages.

In January 2017, the Company entered into an agreement with all secured

creditors other than Mr.

Abdou, for the sale of $125,000 of secured convertible notes payable (the “Notes”)

and warrants.

In 2016, the Company and the Company’s former Chief Executive Officer, Melvin Gagerman, were named among several other

defendants in a lawsuit filed by the Messrs.

Abdou demanding repayment of loans totaling $125,000 plus accrued interest and exemplary

In January 2017, the Company entered into an agreement with all secured creditors other than Mr.

Abdou and Mr.

In September 2018 the court entered a judgment of approximately $235,000 plus legal

fees in favor of the Messrs.

The Company subsequently appealed this judgment and, in September 2019, reached a settlement agreement

with the Messrs.

Abdou to implement a payment plan in accordance with the 2018 judgment.

As of August 31, 2021 the outstanding balance

addition to the other information set forth in this report, you should carefully consider the risk factors disclosed in Item 1A, “Risk

Factors,” of the Company’s Fiscal 2021 Annual Report on Form 10-K issued on July 1, 2021.

September 2018 the court entered a judgment of approximately $235,000 plus legal fees in favor of the Messrs.

The Company subsequently

appealed this judgment and, in September 2019, reached a settlement agreement with the Messrs.

Abdou to implement a payment plan in accordance

with the 2018 judgment.

As of November 30, 2021 the outstanding balance was $30,181 plus accrued interest.

In addition to the other information set forth

in this report, you should carefully consider the risk factors disclosed in Item 1A, “Risk Factors,” of the Company’s

Fiscal 2021 Annual Report on Form 10-K issued on July 1, 2021.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Legal Proceedings